Which Type of Savings Account is Best for You?
As seen on The Rhode Show
Are you saving for a new home, college education, retirement, or just the proverbial rainy day? Whatever your savings goals, there are a range of savings account options available. Unlike a checking account, which is used for everyday purchases, paying bills, and ATM withdrawals, a savings account is primarily used for storing money and earning interest.
You’ve heard of traditional savings accounts, money market accounts, and certificates of deposit, but what are the differences, and which option is best for you?
Traditional Savings Accounts
A savings account is a place where you can store cash securely while you earn interest on your money. If your goal is to save, earn interest and enjoy easy access to your money at any time, a traditional savings account is a good option.
At Washington Trust, our Freedom Statement Savings Account allows you to make deposits and withdrawals at any time while your money earns interest.
- Freedom Statement Savings is also a great way to your children how to save. You can open this with your name and your child’s name; this gives you the convenience to make deposits, big or small, at any time to show your kids how their money can grow.
Money Market Accounts
With a money market account, you may be able to get a better interest rate than you would with a regular savings or checking account, while maintaining immediate access to your funds when you need them. It’s the best of both worlds: You get the earning power of market-competitive rates without tying up your money.
- Money market accounts often require a higher minimum balance.
- These accounts come with a debit card and/or the ability to write checks, but the number of transactions is limited per month.
Certificates of Deposit
Certificates of Deposit (CD)* are used to hold money for a fixed term, from a few months to a few years. Of the types of savings accounts, CD’s usually offer the highest annual percentage yield. The longer the term you commit to, the higher the interest rate.
- CD’s are best for setting aside money you won’t need immediately.
- In a CD, withdrawing money before the end of the term carries a penalty.
Visit any Washington Trust location or AskWashTrust.com to learn more about the different types of accounts we offer and to ask for help determining which is the best fit for your financial goals.
*CDs placed through CDARS are considered bank deposits. They are not DTC eligible and, currently, no secondary market exists. Early withdrawals are available, but require the payment of a substantial penalty.
You should compare the current rates and features of CDs (including CDARS CDs) to other investment alternatives. Past performance may not be representative of future performance or success.
If a depositor is subject to restrictions with respect to the placement of funds in depository institutions, it is the responsibility of the depositor to determine whether the placement of the depositor's funds through CDARS or a particular CDARS transaction satisfies those restrictions. Limits apply. Funds may be submitted for placement only after a depositor enters into a CDARS Deposit Placement Agreement with our bank. The agreement contains important information and conditions regarding the placement of funds by our bank through CDARS.
CDARS is a registered service mark of Promontory Interfinancial Network, LLC.